A considerable increase in refinance activity is projected for the remainder of 2012, according to the Mortgage Bankers Association, which is why the group boosted its forecast for loan volume by roughly $200 billion for the rest of the year.
Total mortgage originations are expected to climb to $1.28 trillion by year's end, the MBA reports. A forecasted sharp hike in refinancing is the main factor for this higher expectation. More than $870 billion in refinances are projected for the year.
"Scenarios we have consistently highlighted that could drive rates down and refis up have materialized, primarily due to market turmoil in Europe," said MBA vice president of research Mike Fratantoni.
Not included in the forecast was refinancing activity through the Home Affordable Refinance Program. Fratantoni stated refis through HARP should remain steady as mortgage records continue to show rates near historic lows.
In addition to low rates, home prices remain stable in many markets throughout the U.S. Modest gains in prices were reported for the first quarter of the year. Compared to the fourth quarter of 2011, home prices improved 0.6 percent, the Federal Housing Finance Agency reports.